When the Hartford Financial Group
recently surveyed small business owners about barriers to success, few
mentioned government regulations or taxes; a
lack of customers was cited far more frequently. That isn't much of a surprise:
Business owners, economists, the Treasury Department and more have long made
clear that lack of demand, not excessive regulation, is holding back the
economy. What's remarkable about this latest poll is the way The Hartford
described it.

Take a look at the headline and lede
of The Hartford's press
release about the poll. "Burdensome
federal regulations" is the very first problem mentioned; "a lack of customers"
isn't mentioned until much later in the release, when The Hartford
employs some nifty sleight of hand with its poll data:

Small businesses are also challenged by
government regulations, which result in greater administrative and accounting
burdens. According to the study, small business owners identify economic
constraints, such as government rules, regulations and taxes, as the single
biggest factor holding them back (37
percent). And, they say that uncertainty about how public policy could
potentially stunt the future growth of business is hindering their ability to
plan ahead.

Other barriers include rising energy and fuel
prices, and a lack of customers.

It turns out that this 37 percent also
includes people who cited other factors beyond taxes and regulation, including
a lack of paying customers and unspecified complaints about the economy. In
fact, regulations and taxes were the two smallest of the four factors constituting
the 37 percent, while lack of paying customers and those unspecified complaints
were cited by 26 percent of all responders.

Mandelbaum also noted that "when
small-business owners were asked to name the single biggest barrier to success,
only 9 percent cited government rules and regulations. Just 2 percent cited
'too many taxes or uncertainty related to taxes.'"

The Hartford's poll found that a lack
of customers was the most frequently cited problem, with taxes and regulations
bringing up the rear. But rather than simply saying that business owners are
most concerned about a lack of demand, and relatively unconcerned about taxes
and regulations, The Hartford combined several different responses into one
number and suggested the least frequently mentioned problems were the
largest component of that number, and the most frequently mentioned were
the smallest. The Hartford's release, in short, grossly misrepresented the
findings of the company's own poll, using the same misleading tactic recently employed
by Rep. Dan Burton (R-IN).

The simplest explanation for
such dishonest behavior by Republicans like Burton is that, consciously or
otherwise, they're sabotaging economic recovery for political gain and
putting the narrow financial interests of the richest Americans ahead of
everyone else. But why would The Hartford misrepresent its own poll? That's
less obvious, but it is worth noting that Hartford President and CEO Liam McGee
wrote an op-ed for the far-right Washington
Times in September, in which he pretended that regulatory policy is holding
the economy back. After citing a National Federation of Independent Business
poll finding small business owners are most concerned about weak sales, McGee
went on to ignore the concept of demand and rail against regulations and taxes:

The United States needs to foster an
environment that is more hospitable to entrepreneurship and small businesses. Washington should learn more about the
special needs of small businesses and not view them simply as big businesses in
miniature. Unlike large companies that have access to equity markets, small
businesses often rely on personal savings, credit cards or collateral such as
their homes to apply for a loan. As a result, their access to credit hinges on
creating a more stable housing market, as well as removing regulatory
hurdles and compliance burdens that remain for banks that want to make loans to
small businesses

We can also help small businesses by ending
the one-size-fits-all approach to regulatory policy. Back in May, when the White House released "The
Small Business Agenda," one of the provisions called for "ensuring
flexibility with regulations that disproportionately affect small
businesses." All of our federal agencies should be looking for ways to
reduce regulatory millstones on small businesses. We should be liberating, not
burdening, entrepreneurs.

We also should provide small-business owners
with incentives that encourage hiring, investing in plants and equipment, and
expansion. As studies from the Small Business Association's Office of Advocacy
show, increasing taxes on small businesses does not make economic sense. The
SBA concluded that higher taxes on individual income, higher sales tax rates,
and state-level estate and inheritance taxes above the federal level all tend
to reduce a state's share of the national entrepreneurial stock.

In light of McGee's opposition to
"higher taxes on individual income" and "inheritance taxes," it's worth keeping
in mind that The Hartford paid McGee $10.6 million last year alone. Also in
September, McGee went on CNBC to criticize President Obama for the
"demonization of businesses" and to call for
fewer regulations:

The Hartford's CEO said in a television
interview that he would like President Obama's administration to offer
incentives to businesses, cut back on regulation and stop
"demonizing" the business community.[...]

McGee then made three points that he would
like to see in Obama's jobs speech tonight. The first two: provide incentives
for businesses and entrepreneurs and change the political tone.

"There has been sufficient demonization
of businesses and entrepreneurs," McGee said. "I think we ought to be
celebrating our entrepreneurs, and those that are creating vibrant businesses
and creating jobs, and I think the president can change that dynamic.
Entrepreneurs are bothered by the rhetoric, and it's not creating confidence."

The third point - reduce regulation for
businesses.

"I think, to the president's credit, he
has said that his administration should look to moderate regulation. I don't
think he can say that enough, and I think he needs to hold his cabinet
secretaries accountable for that."

So The Hartford's press release about its
small business survey misled about the actual results of that survey — and
just happened to substitute the anti-regulatory (and anti-reality) views of its CEO for the views of the small
business owners it purported to report. Combined with the comically flawed
McKinsey & Co. health care study earlier this year and the dubious
track record of ratings agencies like Standard & Poor's, The Hartford's
misrepresentation is a useful reminder of the unreliability of
corporate-produced economic analysis — and of the folly of calls to privatize
the Congressional Budget Office.